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Samsung boosts non-memory chip investment to $151 billion as S.Korea offers bigger tax breaks

Samsung's increased investment target, up from 133 trillion won announced in 2019, is expected to be used for its goal to become the world's No. 1 logic chipmaker by 2030.   | Photo Credit: Reuters

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Samsung Electronics on Thursday raised its planned investment in non-memory chips to 171 trillion won ($151 billion) through 2030, joining a rush of firms ramping up investments amid a global semiconductor shortage.

Countries have also been working to bolster chip supply chains as the chip shortage affects production in industries such as autos. South Korea on Thursday said it would offer bigger tax breaks plus 1 trillion won ($883 million) in loans for its local chip industry.

Also Read | Why Apple has chips for iPhones while Ford got caught short

Some 153 chip companies including global No.1 and 2 memory chip makers Samsung and SK Hynix already have plans to invest a combined 510 trillion won or more between this year and 2030, according to the Korea Semiconductor Industry Association.

Samsung's increased investment target, up from 133 trillion won announced in 2019, is expected to be used for its goal to become the world's No. 1 logic chipmaker by 2030. It wants to challenge bigger rivals TSMC in contract chip manufacturing and Qualcomm in mobile processing chips.

Samsung also said in a statement that its third chip production line at Pyeongtaek, south of Seoul - the size of 25 football fields - will be completed in the second half of 2022.

Also Read | Chipmaker TSMC approves $2.8 bln for capacity expansion

"Countries around the world have entered fierce competition by reorganising supply chains around their own country," South Korean President Moon Jae-in said Thursday at Samsung's chip site at Pyeongtaek.

"We need pre-emptive investments... to strengthen the domestic industrial ecosystem and lead the global supply chain to make this opportunity ours."

South Korea will increase tax breaks to 6% from the current 3% or lower for capital expenditures between second half of 2021 to 2024 for large corporations conducting "key strategic technology" including semiconductors, the Ministry of Trade, Industry and Energy said in a statement.

Also Read | Samsung considers four sites in U.S. for $17 bln chip plant

The government will offer about 1 trillion won in long-term loans for increasing 8-inch wafer chip contract manufacturing capacity and investment for materials and packaging. It also raised number of chip industry workers to be educated to 36,000 by 2030, more than double its previous target in 2019.

"Setting up an environment where smaller fabless firms can thrive, with plenty of workforce and foundries, would naturally bolster system chip industry," said Jinwook Burm, head of the Institute of Semiconductor Engineers.

In March, U.S. President Joe Biden flagged plans to invest $50 billion in semiconductor manufacturing and research.

Also Read | Facing chips shortage, Biden may shelve blunt tool used in COVID fight

Chips are the No. 1 export item for South Korea, accounting for about 20% of exports.

Samsung, Hyundai Motor, the ministry and industry associations also agreed to join efforts to respond to auto chips' shortage on Thursday, the presidential office said in its statement without providing details.


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Printable version | Jun 18, 2021 5:21:03 AM | https://www.thehindu.com/sci-tech/technology/samsung-boosts-non-memory-chip-investment-to-151-billion-as-skorea-offers-bigger-tax-breaks/article34550267.ece

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